Job openings fell in May, a sign of continued cold weather

Federal Reserve policymakers are concerned about the strength of the labor market as they continue to tackle stubbornly high inflation.

The central bank decided to keep interest rates unchanged at its June meeting after 10 consecutive hikes. The JOLTS report is one of several factors that will inform the Fed’s next decision on rates.

Some economists worry that the Fed will raise interest rates too high and trigger a recession.

But the JOLTS report and previous economic temperature tests have convinced others that a “soft landing” — the effect of easing inflation to the Fed’s target of 2 percent without slowing — is achievable. The big question is whether wage growth continues to cool as workers switch jobs, said Aaron Terrazas, chief economist at Glassdoor’s career site.

“A tight labor market is not necessarily inflationary,” he said.

The labor market remains resilient amid the central bank’s efforts to slow the economy, but has shown signs of cooling in recent months. Employment declined for three consecutive months through April.

initial Unemployment claimsReleased by the Labor Department on Thursday, the week ended July 1 rose from the previous week, although the four-week trend showed initial claims declining.

Although employment prospects have cooled, May’s reading of 9.8 million is up compared to prepandemic levels. For example, in 2019, the monthly total reached seven million.

“To some extent, I worry that we’ve become desensitized to what were once eye-popping numbers,” Mr. Terrazas said.

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The June employment report — another indicator closely watched by the central bank — will be released by the Labor Department on Friday. Economists polled by Bloomberg had expected the preliminary reading for May to show a gain of 225,000 from 339,000.

The unemployment rate rose to 3.7 percent in May from 3.4 percent a month earlier. Although still historically low, the rate was the highest since October and exceeded analysts’ expectations.

The central bank’s policymakers will hold their next meeting on July 25-26.

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